Elcina for zero-import duty on raw material, parts

Our eFE Bureau in New Delhi

The Electronic Component Industries Association (Elcina) has asked the government to implement a modified Electronic Hardware Technology Park (EHTP) scheme to ensure that hardware manufacturing takes root in the country.

It also sought zero import duty on raw materials and parts used in the manufacture of components in its 2002-03 budget recommendations submitted to the finance ministry.

As part of the scheme, ELCINA said that all restrictions on sales by EHTP units, which are allowed duty free imports of capital goods and components, should be eliminated. Currently, only 50 per cent of the sales by units located in EHTPs are allowed in the domestic market while the rest compulsorily have to be exported. “Today, with nil customs duty on many hardware products, the distinction between domestic tariff area (DTA) and the global market is disappearing,” ELCINA secretary general Somnath Chatterjee, said.

Conversely, it has also asked all hardware units in DTA, with at least Rs 1 crore investment in manufacturing, to be allowed to become part of the modified EHTP scheme.

“Modified EHTP is expected to bring in an estimated $2 billion in annual investment in components and hardware,” the association said.

Elcina represents over 250 companies, including the likes of Bharat Electronics, Samtel, BPL, Videocon and Wipro e-peripherals.

The association also sought a concessional 8 per cent excise levy for sales in DTA, against the current 16 per cent.

On the import duty front, it said that cutting it to zero would lead to a revenue loss of “a modest Rs 240 crore, which would be outweighed by the benefits enjoyed by the nation as a whole.” There is currently anomaly in the import duty structure with components attracting 0-15 per cent duty while input duties are 5-35 per cent. This discourages local manufacturing, Elcina said.

To encourage investment in component manufacturing, ELCINA further sought a 5-year tax holiday for all projects with investment exceeding Rs 50 crore.

The component manufacturers also argued against any preponement of the 2005 deadline mandated by the Information Technology Agreement for implementing a nil import duty regime for all IT products and components.